Overproduction – If the organization does not use a pull system to produce based on your customers’ needs, then you will most likely produce more finished goods than you can readily sell. You may also undersell or ship late, not meeting your customers’ demands. You should strive to meet 100% of your customers’ delivery compliance schedules. Overproduction is a waste, since it ties up valuable assets and causes your Materials and Logistics Departments to order more raw materials and produce more work-in-progress (WIP) goods that compounds the carrying costs. Do you ever have to store raw, WIP or finished goods in trailers because you have run out of warehouse space? This is a sure sign that you are producing the wrong mix of product compared to your sales forecast or your customers’ pull requirements.
Delay (Waiting) – This is also a sign of not having the right mix of raw or WIP materials on hand when you need them. This can be process equipment or MRO components. How often are your craftspeople waiting for the right spare part to fix equipment? Do they ever have to cannibalize other pieces of equipment to get a critical machine back up and running to meet a customer’s need? When was the last time you worked on your vehicle or lawnmower and you reached for a wrench but found it wasn’t there? “Someone” didn’t put the tool back where you wanted it. Now you have to stop working on your task and search for the right tool to complete the job. Applying 5S to workstations can help eliminate these external delays. Another form of waste is an unbalanced work process where one person has to wait for the upstream operator to finish their task. “Takt time,” or the ideal time between phases of production output, synchronized to demand, is used to balance the work between operations to meet the customers’ needs in an efficient manner.
Transport – All suppliers’ requests for quotes (RFQs) should be evaluated on a landed-cost basis. Many buyers forget about the cost to transport parts — that’s the Logistics Department’s responsibility, right? That’s the easiest way to document the cost to transport raw materials to your dock. Now try to calculate the cost to transport your raw materials, WIP and finished goods throughout your facility. Having a one-piece flow layout will reduce that cost and increase your turns. Using a process flow diagram or a Value Stream Mapping process will help document how inefficient and costly some layouts can be.
Processing Inefficiencies – Using poor scheduling practices or running incapable equipment or tooling will cause process losses. That is why Standardized Work Practices (SWPs) are so important. Using a cross-functional team to validate SWPs or Standard Operating Procedures (SOPs) is the most sustainable method for instilling ownership and buy-in within the ranks of the most valuable asset you have — the people performing the work. Make sure that you use SOP’s properly at places where they are required during projects.(Attachment)
Inventory – Excess inventory can be very costly. If the financial organization values your carrying cost at 30% and you have excess inventory in raw, WIP and finished goods, then there should be formal plans that reduce your inventory to increase your turns. Number of inventory turns is a standard metric to evaluate the effective utilization of your assets, that is, your material costs. Excess inventory can be a result of long lead times from your suppliers (internal or external), or the respective reorder triggers. Just-In- Time delivery and Kanban actions can reduce this excess cost. An inefficient workflow can also induce costly inventory into the process.
Unnecessary Motion – Non-value-added efforts are like attorneys — you don’t realize how much time and effort you are wasting until you analyze the internal and external delays. Using a “dance chart” to document all of your travel time will illustrate how much time and effort you are expending without adding any value to the process or product. This will help you recognize the wastes in ineffective layouts, tooling or practices. Remember the pit crew? They review their performances using a bird’s eye camera view to evaluate any wasted movements and the motion, time and movement of each team member to balance the total operation.
Scrapped Batches – If you have a plan to become world class to achieve a Six Sigma level of First Time Quality, then you understand the value of 1 PPM in scrap. Enough said. Making product that is out of spec is very costly.
The Eighth Waste :Lack of Employee Involvement – Provided you have the right people in the right seats on the bus, your human resources are your most valuable assets.
Why do we need to involve employees in the continuous improvement process?
There are numerous reasons: to create a safer work environment, to improve job security and product quality, increase productivity, improve skills and maybe the most important reason in the global manufacturing community — to remain viable competitors in the world economy.